It may be a mere coincidence, but Gerald A. Buchheit, Jr. – the developer behind the 23-story tower proposed for the former Freezer Queen site – has something in common with billionaires Jeremy M. Jacobs, Sr. and Kim and Terry Pegula. They all have given large donations to Governor Andrew Cuomo and all have received an environmental “free pass” for recent Buffalo projects.

The State Environmental Quality Review Act [SEQRA] presumes that a major development project may have a significant adverse impact on one or more aspect of the environment. For that reason, SEQRA anticipates that a major project – referred to as a “Type I action” – will require preparation of a Draft Environmental Impact Statement [DEIS]. Fortunately for these campaign contributors, the City’s Planning Board and the Erie Canal Harbor Development Corp. [a state-created entity] fast-tracked the approval process for each developer’s recent project, and issued a “Negative Declaration.” By doing so, the SEQRA process was abruptly ended, and, as a result, Mr. Jacobs, the Pegulas, and, now, Mr. Buchheit, were able to circumvent any meaningful environmental review or public scrutiny, as well as the expense and delay accompanying the DEIS process.

As I addressed in a September 2015 post in greater detail [see https://withallduerespectblog.com/2015/09/23/buffalos-billionaires-hailed-as-philanthropists-insist-on-profiting-at-the-publics-expense/], Mr. Jacobs made a $50,000 donation in June 2010 to Andrew Cuomo’s gubernatorial campaign (and, also contributed $11,250 to Mr. Cuomo in August 2014 during the Democratic primary skirmish between the incumbent Governor and challenger Zephyr Teachout). In between the two political donations, the City Planning Board issued a Negative Declaration for the new headquarters of the Jacobs family’s Delaware North company – located at the corner of Chippewa Street and Delaware Avenue – eliminating the need for a DEIS.

New York State records show that in 2013 and 2014 Kim and Terry Pegula made personal contributions totaling $67,000 to Gov. Andrew Cuomo. The Pegulas’ massive waterfront project – HarborCenter – was approved by the Cuomo-controlled ECHDC without the requirement of a DEIS.

Despite his apparent preference for the Republican Party and its candidates, Gerry Buchheit wrote a $25,000 check to Andrew Cuomo’s campaign fund in June 2015. The prior year, he had made a post-primary donation of $5,000 to Gov. Cuomo’s running mate, Kathy Hochul. [See Buchheit Donations.] On May 31, 2016, the City Planning Board issued a Negative Declaration for Buchheit’s Queen City Landing project, concluding the environmental review process for the controversial Outer Harbor tower.

It has not yet occurred, but odds are awfully good that Mr. Buchheit will soon have something else in common with Buffalo’s billionaire developers – financial assistance for his project through the State’s Brownfield Cleanup Program. The State Department of Environmental Conservation – which acquiesced to the City Planning Board’s request to make the SEQRA determinations for Buchheit’s Outer Harbor project – currently is reviewing Queen City Landing’s dual applications for brownfield assistance.

** By embracing – rather than eschewing – corporate welfare/crony capitalism, the Pegula and Jacobs families help perpetuate a political system where corporate money speaks much more loudly than the voices of average citizens. **

Terry Pegula, co-owner – with his wife Kim Pegula – of the Buffal Sabres, Buffalo Bills, and HarborCenter, was introduced as a “true Buffalo philanthropist” at the September 21st grand opening of the Marriott hotel, an imposing structure at the edge of Buffalo’s “lighter, quicker, cheaper” Canalside. One week earlier, a Buffalo News editorial touted “the absolute dedication” of Jeremy M. Jacobs Sr. “toward this community” following his family’s $30 million gift to the University at Buffalo medical school. An accompanying article on September 14 referred to the family’s “philanthropy” as transformational, noting that the Jacobs clan had provided the second largest donation in UB history “behind only a $40 million gift made anonymously in 2011 by a late local doctor.”

Undoubtedly, a $30 million donation – regardless of its tax-deductible status, and whether or not it represents less than one percent of Mr. Jacobs’ estimated $4 billion net worth – is staggering. From my perspective, however, a “philanthropist” is a person who does more than make a generous gift – she or he actively promotes human welfare and social reform.

Jeremy Jacobs, with his billions, and Terry Pegula, reported by Forbes as having an estimated $4.6 billion net worth, were recently in a position to demonstrate a true commitment to the future of Western New York. As billionaires, the Jacobs and Pegula families could afford construction of their respective downtown Buffalo projects without the necessity of financial assistance in the form of real property tax abatements, sales tax credits, and other manner of corporate welfare. Proceeding without taxpayer-funded aid would have set a significant example for other well-heeled developers, and would have constituted a highly visible first step in restoring a semblance of integrity to our political system. But, motivated perhaps by a sense of entitlement, Buffalo’s Billionaires chose profit over the promotion of political reform and human welfare.

Despite being owned by one of the Nation’s wealthiest citizens, a Buffalo-bred company won hundreds of thousands of dollars in tax breaks Monday, to ensure it stays in the Queen City for foreseeable future. The Erie County Industrial Development Agency (ECIDA) board of directors voted unanimously to grant Delaware North, owned by billionaire Jeremy Jacobs, $807,000 in sales tax abatements, so that it can move its corporate headquarters from the Key Center, approximately two blocks to a new $80 million building proposed by Uniland Development at the corner of Delaware Avenue at Chippewa.

Notably, the vote approving $800,000 in tax breaks [chump-change for a man worth four billion] was preceded by a less-than-philanthropic warning from the senior Jacobs son, Jerry Jacobs Jr., that Delaware North would find it “hard to turn down” a better offer from another city if it failed to receive the financial assistance it had requested. Equally disconcerting, Gov. Andrew Cuomo directly interceded on behalf of Delaware North and, as reported by the Buffalo News, “placed a call to CEO Jeremy Jacobs Sr. to assure him that his administration will do what it can to keep Delaware North in Buffalo.”

What is most troubling about the Governor’s call to “philanthropist” Jacobs is the fact that the Buffalo billionaire had made a $50,000 donation in June 2010 to Mr. Cuomo’s campaign, and contributed an additional $11,250 to Andrew Cuomo in August 2014 during the Democratic primary skirmish between the incumbent Governor and challenger Zephyr Teachout.

Note: Ms. Teachout, a Fordham University law professor and staunch critic of government corruption, had the following to say in an op-ed piece printed in the Buffalo News just weeks after Mr. Jacobs generously donated to Mr. Cuomo’s campaign:

…

Western New York cannot afford to repeat the mistakes it made generations ago when businesses placed profits over clean air, clean water and the health of residents. The Buffalo Billion must be allocated without favoritism, and the selection process should be transparent. Winners must include local companies and small businesses that truly need the assistance to grow. Certainly the commitment of 20 percent of the Buffalo Billion to one project, RiverBend – a project that has repeatedly changed in size and scope – should be carefully re-evaluated.

It may only be a coincidence, but it is demoralizing for competing companies, taxpayers and residents to learn that two prominent Buffalo developers, LP Ciminelli and Uniland Development, were awarded major developer status for two Buffalo Billion projects following sizable contributions to Andrew Cuomo’s 2014 campaign.

Meanwhile, the Pegulas (frackers who who made their fortune in oil and natural gas) possess the wealth needed to spend a total of $1.6 billion to purchase the Buffalo Sabres and Buffalo Bills and develop HarborCenter. And, as expressed by a longtime confidant of the billionaire couple, they were “not upset at all” that the final price tag for constructing “something very special” alongside Buffalo’s Inner Harbor exceeded initial projections by approximately $40 million.

Perhaps the higher final price for HarborCenter “was not a concern” for these Buffalo newcomers because they are receiving public assistance totaling around $57 million to further their for-profit venture. They applied for, and received at taxpayers’ expense, a thirty-seven-million-dollar corporate welfare package for the HarborCenter project, described in the following manner by the Buffalo News:

… The ECIDA approved a nearly $37 million tax incentive package that includes $28 million in property tax breaks over 10 years, $7.5 million in sales tax savings and $1.2 million in mortgage-recording tax breaks.

Oddly, the media appear eager to downplay the financial aid that the Pegulas have received in furtherance of the HarborCenter development. Chris Caya, the usually reliable WBFO reporter, refers to “a relatively small public subsidy” in his recent report, identifying “$35 million in tax breaks,” but failing to reference the additional $20 million in brownfield tax credits. Similarly, Buffalo News reporter Jonathan D. Epstein, felt the need to favorably contrast HarborCenter and UB’s new medical school, Kaleida’s new women and children’s hospital, and SolarCity at Riverbend, mentioning the $37 million ECIDA hand-out but leaving out a dollar amount when referring to state brownfield credits:

… Only the University at Buffalo’s new Jacobs School of Medicine and Biomedical Sciences ($375 million), the John R. Oishei Children’s Hospital ($270 million) and the factory for SolarCity at Riverbend in South Buffalo ($250 million) are more expensive. And all three of those are public-sector projects, with far more government support than the tax breaks – $37 million from the Erie County Industrial Development Agency plus state brownfields tax credits – that the Pegulas received…

But I do not want to understate the political donations made by the Pegulas. New York State records show that between September 13, 2013 and October 25, 2014 – a mere 13-month period – Kim and Terry Pegula made personal contributions totaling $67,000 to Gov. Andrew Cuomo.

There is no way we can rationally deny the ugly fact – so aptly captured by Buffalo News political cartoonist Adam Zyglis on September 18, 2015 – that Buffalo is indeed a “Tale of Two Cities,” with a spruced up waterfront and a morally-unacceptable poverty rate. Given this reality, we need billionaire philanthropists who will refuse to partake in corporate welfare and, instead, work toward a political system were the voices of Buffalo’s average citizens can be heard over the deafening roar of corporate money. I won’t hold my breath.

As veteran reporter and Investigative Post founder Jim Heaney observed recently: while Buffalo was in the midst of its “building boom” last summer, the Queen City had 4 construction cranes piercing the sky; Toronto had 154.

More troubling than the Cuomo administration’s hyperbole is the campaign suggesting that the governor’s “Buffalo Billion” tactics should be used as a role model for all of upstate New York. According to Mr. Zemsky, communities need to “learn the lesson of the Buffalo Billion” and transform their economies to be self-sustaining through “real investments that actually create jobs.”

Unfortunately, the true lesson that the public should take from Buffalo’s so-called “economic rebirth” is profoundly troubling and anything but exemplary.

Western New York’s “building boom” rests on a dubious foundation. Three symbols of Buffalo’s “turnaround” – RiverBend’s Innovation Hub at the Outer Harbor:

and Terry and Kim Pegula’s HarborCenter project on the former Webster Block in downtown Buffalo:

share two troubling traits:

(1) The government decision-makers “fast-tracked” their approvals by circumventing SEQRA’s Environmental Impact Statement (EIS) process. The EIS is “the heart” of SEQRA (the State Environmental Quality Review Act). When done correctly, the EIS provides a “hard look” at the potential significant adverse impacts of a proposed action, and a detailed description and evaluation of reasonable alternatives and mitigation measures. Importantly, it offers the public a meaningful vehicle for input by mandating a minimum 30-day “public comment period” at an early enough stage in the planning process that true flexibility exists.

[Graph prepared by Arthur J. Giacalone and James A. Giacalone]

(2) Large sums of taxpayer money and “corporate welfare” have been allocated to the three projects. The State of New York intends to invest $225 million in the Innovation Hub project to provide roads and infrastructure at the site, construct the first two of six buildings, and purchase and own expensive scientific equipment. The Erie County Industrial Development Agency (ECIDA) has agreed to provide billionaires Terry and Kim Pegula an incentive package of nearly $37 million for the HarborCenter development, a 19-story, 650,000-square-foot project, including $28 million in property tax breaks over ten years, $7.5 million in sales tax relief, and $1.2 million in mortgage tax breaks. Additionally, the HarborCenter developers can anticipate receiving $20 million in brownfield-related tax credits for spending $8.7 million to clean up the former parking lot site. Not surprisingly [see the note below], Gov. Cuomo used his influence to make certain that the Jacobs – another billionaire family – obtained a controversial $807,000 in sales tax relief from the ECIDA to subsidize the two-and-a-half block move of the Delaware North Companies’ headquarters from the Key Center in the 500 block of Buffalo’s Main Street to 250 Delaware Avenue. Uniland Development, Delaware North’s partner in constructing the 12-story, 472,320-square-foot mixed use development (with 4-story parking ramp) at the corner of Delaware Ave. and Chippewa Street, obtained $3.2 million in real estate tax relief from the ECIDA.

Note: The Buffalo News reported in 2013 that Gov. Cuomo had received political donations totaling $105,026 since 2006 “from either Delaware North or members of the Jacobs family.”

SUNY’s CSNE disregarded SEQRA’s presumption that the comprehensive environment assessment mandated by the EIS process is required whenever a proposed project meets any one of the thresholds for what SEQRA calls a “Type 1 action.” Two of those thresholds are particularly relevant here. The Innovation Hub project involves the physical alteration of 90 acres of land, which is nine times the 10-acre threshold for a “Type 1” action. It also entails the construction of nearly one million square feet of buildings – more than four times SEQRA’s 240,000-square-foot threshold triggering the presumption that an EIS be prepared.

“Redevelopment planned along the Buffalo River corridor needs to be better integrated at all planning levels with the restoration investments made through the RAP process to date. This will ensure that adequate site-level policies and protections are in place for long-term RAP delisting goals. “

In November 2013, when Gov. Cuomo announced the State’s plan to invest $225 million in the Innovation Hub project, Howard Zemsky, in his capacity as co-chair of the Western New York Regional Economic Development Council, made the following proclamation: “The Buffalo Billion is intended to be transformative. We’re the capital of clean energy in New York State.”

It is rather ironic – if not perverse – that Cuomo and Zemsky have chosen to transform Buffalo into “the capital of clean energy” by ignoring SEQRA’s comprehensive environmental review process. SEQRA was enacted in the mid-1970s to prevent future development from repeating the environmental devastation that eventually led to designation of the Buffalo River’s “Area of Concern” and decades-long remedial action. The decision to place RiverBend’s Innovation Hub in a highly sensitive area along the Buffalo River prior to conducting the proper environmental review to determine if the site is appropriate for such activities is, at a minimum, indefensible and irresponsible. We cannot rationally and responsibly research, develop, and manufacture “clean energy” products if the process of doing so harms the surrounding environs, which includes the Lake Erie shoreline.

Neither the environment, nor New York’s taxpayers, can afford to use the Buffalo Billion or the Queen City’s “economic rebirth” as a role model for future development.

With All Due Respect,

Art Giacalone

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